Chapter 1: Basic
Economic Concepts
Lesson 1
DEMAND AND SUPPLY
LEARNING OUTCOMES
➢ Identify entrepreneurship
➢ Differentiate between
microeconomics and
macroeconomics
➢ Differentiate between the Law of
Demand and the Law of Supply.
➢ List the non-price factors affecting
demand and supply.
Becoming an
Entrepreneur
Have you ever
considered going into a
business yourself?
Becoming an Entrepreneur
Entrepreneur is the one who
organizes, manages, and assumes the
risks of a business or enterprise.
Entrepreneurship is the primary
catalyst for the economic growth. To
be a successful entrepreneur requires
an understanding of how the
economy works.
INTRODUCTION
○
○
Entrepreneur is the one who organizes, manages, and assumes the risks
of a business or enterprise.
Entrepreneurship is the primary catalyst for the economic growth. To
be a successful entrepreneur requires an understanding of how the
economy works.
Classwork!
Read the following article, then write down at least
three points to be discussed with the classroom
about “Know the Impact of Entrepreneurship on
Economy and Society”
https://www.opengrowth.com/resources/know-theimpact-of-entrepreneurship-on-economy-andsociety
1.
2.
3.
Test your knowledge
https://quizizz.com/admin/quiz/63157c5cf2e532001d97f
417?source=quiz_share
Microeconomics
The two main
branches of
economics are
macroeconomic
s, which looks at
the overall
economy, and
microeconomics,
which looks at
specific factors
within the
economy.
Macroeconomics
Studies individual income
Studies national income
Analyzes demand and supply of labor
Analyzes total employment in the
economy
Deals with households and firm
decisions
Deals with aggregate decisions
Studies individual prices
Studies overall price level
Analyzes demand and supply of
goods
Analyzes aggregate demand and
aggregate supply
Microeconomics is a branch
of economics that studies the
behavior of individuals and firms in
making decisions regarding the
allocation of scarce resources and
the interactions among these
individuals and firms.
Macroeconomics is the branch of
economics that studies the behavior
and performance of an economy as
a whole.
Find out the meaning of the following
indicators, then categorize as microeconomics
or macroeconomics.
➢ Inflation
➢ Demand and supply
➢ Unemployment
➢ Opportunity cost
➢ Elasticity
➢ GDP
➢ Inelasticity
➢ Growth
Microeconomics
● https://www.investopedia.com/terms/m/microeconomics.asp
LAW OF
DEMAND
AND
LAW OF
SUPPLY
Law of Demand
Law of Supply
Demand is an economic principle
referring to a consumer's desire and
willingness to pay a price for a specific
good or service. Holding all other
factors constant, an increase in the
price of a good or service will
decrease demand, and vice versa.
Supply is a
fundamental economic concept that
describes the total amount of a
specific good or service that is
available to consumers.
Law of supply refers to the relationship
between price and the quantity of a
good or service that firms are willing to
produce.
Therefore, the higher the price of the
product leads to more supplies and
more companies making the product.
❖ As prices increase, quantity
demanded decrease
❖ As prices decrease, quantity
demanded increase
❖ As prices increase, quantity
supplied increase
❖ As prices decrease, quantity
supplied decrease
Movement along demand curve
A change in price causes a
movement along the demand
curve.
An increase in price from $12 to
$16 causes a movement along
the demand curve, and quantity
demand falls from 80 to 60.
A change in price doesn’t shift
the demand curve – we merely
move from one point of the
demand curve to another.
Movement along Supply Curve
Refer to Demand and Supply worksheet!
Price per
IPhone
Quantity
demanded
of IPhone
(millions)
Quantity
supplied of
IPhone
(millions)
200
25
3
400
17
10
600
11
17
800
7
23
1000
2
30
Answer the following questions on the
discussion board.
Why Are Supply & Demand Important to a Business?
Complete the attached worksheet “Supply
and Demand” on learn online.
Factors that affect Demand and Supply
Demand
● Income changes
● Market size
● Change in Consumer taste and
preferences
● Price of related goods
Supply
● Cost of production
● Technology
● Government policies
1.2: Components of
Aggregate Demand
LEARNING OUTCOMES
➢ Identify aggregate
demand
➢ Discuss the
components of
aggregate demand
Aggregate Demand
➔ Aggregate demand is an economic
measurement of the sum of all final
goods and services produced in an
economy, expressed as the total
amount of money exchanged for those
goods and services.
➔ Demand in macroeconomics is called
Aggregate Demand (AD). It shows the
total planned or desired spending in the
economy during a given period.
➔ It is influenced by consumption
expenditure (C), investment
expenditure (I), government
expenditure (G) and net exports
(exports Imports) (X-IM)
Aggregate Supply
➔ Supply in macroeconomics is
called Aggregate Supply (AS). It
shows the total planned or
desired production in the
economy during a given period.
The aggregate supply curve
shows the relationship between
the total outputs that firms would
supply at each price level.
Shifts in Demand curve
Demand curve shift to the right
(increase)
Demand curve shift to the left
(decrease)
Shift in supply curve
Shift to the right in supply curve (increase)
Shift to the left in supply curve (decrease)
Task 1
● Watch the video then answer the questions that follow.
https://youtu.be/hTWPrWmPJS0
1. Define aggregate demand.
2. Explain why the aggregate demand curve is downward sloping.
Task 2
Read the article then answer the questions that follow.
https://www.investopedia.com/ask/answers/031815/what-factorscause-shifts-aggregate-demand.asp
1. Describe the factors that affect aggregate demand.
2. Explain what factors will shift the aggregate demand curve
Aggregate Demand
➔ Aggregate demand is an economic
measurement of the sum of all final
goods and services produced in an
economy, expressed as the total
amount of money exchanged for those
goods and services.
➔ GDP is the gross domestic product is
the total market value of all goods and
services produced by workers and
capital within a nation during a given
period of time.
➔ Assuming that AD = GDP
➔ AD = GDP = C + I + G + NX
https://youtu.be/hTWPrWmPJS0
● What does the letter refer to?
● What does this component
consist of?
● What might affect that
component?
AD = GDP = C + I + G + NX
● C = consumer expenditures on goods and services
● I = private investment and corporate spending for non-final capital goods
(factories, equipment, …)
● G = government spending for public goods and social services (med care,
education, infrastructure, …)
● NX = net export = (X-M) = Exports – Imports
● Exports are the selling and shipping of locally produced goods to other
countries.
● Imports are the buying and bringing of goods from other countries to sell.
Define each of the following as C(consumer spending) – I(investment) –
G(government spending) – X(exports) – M(imports)
1. Buying updated machineries
2. Local production sold overseas
3. Expanding public transportation routes
4. Using taxi services
5. Building bigger factories
6. Improving education
7. Bringing in products from China
8. Buying an apartment
Situation
The government
cuts taxes on
products in the
market
Investment
spending is
decreased
Surveys show that
consumer
confidence is
getting higher
Stock market
collapses and
investors are
losing billions
Consumers are
expecting better
economic
conditions
Component
changing
Change in AD
New AD Curve
1. Identify the
component
that is being
affected as a
result of the
situation.
2. Describe the
effect on the
aggregate
demand.
3. Illustrate
that effect
on a graph
Lesson 1.4 &1.5:
GDP
LEARNING OUTCOMES
1. Define Gross Domestic Product (GDP)
2. Explain the components of GDP.
Definition of GDP
GDP is the gross domestic product is the total market value of all
goods and services produced by workers and capital within a
nation during a given period of time.
https://www.youtube.com/watch?v=iLom1WlqwS0&t=107
Characteristics of GDP
GDP is the sum total of market value of all goods and services
produced within a country in a given time period . The features
are :
❖ Sum total of market value - GDP is calculated at the market
price of any good and service.
❖ All goods and services -GDP is the total of market value of all
goods and services, like wheat , milk, etc.
❖ Produced within a country - GDP only incorporates the values
of goods and services produced within the geographical
boundaries of the country.
❖ Within a given time period -GDP is calculated for a given
period of time usually one year.
GDP
● https://data.worldbank.org/i
ndicator/NY.GDP.MKTP.CD?
end=2018&locations=ZQ&st
art=2018&view=map
SOLVE ATTACHED GDP WORKSHEET
ON LEARN ONLINE
Assignment
Prepare a short PowerPoint presentation comparing the
economic phases of UAE and another country of the
period 1998 – 2022.
3 Students Per Group
1.6: Economic
Equilibrium
1. Interpret the flow of
money in an economy.
Aggregate supply
Aggregate supply, also known as total output, is the total supply of goods and services
produced within an economy at a given overall price level in a given period.
● AD > GDP SHORTAGE
● AD = GDP ECONOMIC EQUILIBRIUM
● AD < GDP SURPLUS
Engage
Watch the video, then answer the questions that follow
Https://www.youtube.com/watchv=?de3iGMjA_8c
1. Name the three main stages of the circular
flow
2. List the main components of each stage
The Circular Flow
The circular flow shows how producers react with
consumers in a single economy. It shows how
producers (firms) supply products relying on
consumers' total demands and needs.
NI = DI + TAXES
AD = GDP = NI = AS
DI = NI - TAXES
DI = C + S
Consequently, C+S = NI - TAXES
DI = NI - TAXES
Therefore: DI = GDP - TAXES
Solve Learning Activities on learn
online.
Lesson 1.7:
Business Cycles
LEARNING OUTCOMES
1. Define the role of economic indicators
and business cycles.
https://www.investopedia.com/terms/b/businesscycle.asp
Business Cycle
Complete the check
your progress on learn
online.
Task 1: Identify the effect of each phase on the following
indicators:
Peak
GDP
Unemployment
Growth
Recession
Slump/Trough
Expansion
Task 2: Identify the phase of the business cycle described in
each phase
1. Stores continue to place large orders to keep up with growing demand.
2. Businesses surpluses accumulate because consumer demand has
fallen down.
3. Consumers begin to cut back on spending for luxuries such as
entertainment.
4. A large number of corporations and major businesses go out of
business.
5. Stock prices plummet and unemployment is widespread.
6. The number of banks loaning money to prospective homeowners
reaches an all time high.
Task 3: Be prepared to give a one-minute talk describing
conditions in the phase of the business cycle for one of the
following indicators.
Phase of Business Cycle
Indicator
Interest Rate
Stock Prices
Consumer
Confidence
Consumer
Spending
Business
Investment
Slump/Trough
Expansion
Peak
Recession
1.8: Stock Market
1. Define the stock
market.
2. Identify the indices of
the stock market.
To be listed on stock market companies need
to be public!
⏷ What does a stock mean?
⏷ Who are the stockholders?
⏷ What does public mean?
⏷ Why companies go public?
⏷ How does a company go public?
Is it a risk free investment?
https://www.youtube.com/watch?v=p7HKvqRI_Bo&t=59s
Think pair share
Choose two companies and fill the table underneath.
Company Name
Is it Public or Private?
Stock market
exchange name
Ticker Symbol
Recent Price of the
share
Hewlett Packard
Enterprise Co.
Public
NYSE
HPE
$16.68
Activity
Visit dfm.ae and answer the questions that
follow.
1. Which type of companies are listed on a stock market?
2. Why companies decide to go public?
3. How does it help in the company's growth?
4. What do you think would happen in a stock market
activity?
Solve stock market worksheet